Finding Text
2022-005 Improve Controls Over Cash Management and Application of Indirect Cost Rate
Federal Program Information
Federal Agency: Department of Health and Human Services, Centers for Disease Control and Prevention
Award Name(s): Injury Prevention and Control Research and State and Community Based Programs
Assistance Listing Number(s): 93.136
Award Year: 2022
Compliance Requirement: Cash Management, Allowable Costs/Cost Principles
Federal Agency: Department of Health and Human Services, Centers for Disease Control and Prevention
Award Name(s): Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises
Assistance Listing Number(s): 93.391
Award Year: 2022
Compliance Requirement: Cash Management
Type of Finding
Compliance
Internal Control Over Compliance – Significant Deficiency
Criteria or Specific Requirement
Management of the Organization is responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. Management of the Organization is also responsible for establishing the appropriate modified total direct cost base and applying the de minimis indirect cost rate accordingly.
Condition and Context
There is no documented review of requests for reimbursement by an individual that is not involved with preparing the requests. The Director of Finance is both preparing and reviewing requests for reimbursement with no additional oversight. As a result of this, there is also no review over indirect costs charged to the program and the application of the indirect cost rate prior to requests for reimbursement.
Cause
The Organization did not have adequate controls in place to ensure approval over reimbursement requests prior to submission to the federal agency, including application of the indirect cost rate to the appropriate modified total direct cost base.
Effect or Potential Effect
Due to the weakness in internal controls noted above, there is a risk that amounts requested to be reimbursed under federal awards could not be allowable or in accordance with applicable cost principles, including application of the indirect cost rate.
Questioned Costs
Due to the condition noted above, the indirect cost rate was not applied to the appropriate modified total direct cost base and resulted in the following questioned costs.
AL Number(s) Name of Federal Program Questioned Costs
93.136 Injury Prevention and Control Research and State and Community Based Programs $35,187
Recommendation
The Organization should address the weaknesses in internal controls noted above by requiring two individuals to be involved in requesting reimbursements, and that the review and oversight of reimbursement requests and application of the indirect cost rate be documented.
Views of Responsible Official
Management agrees with the finding. Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.